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Program on Energy and Sustainable Development Working Paper #62

September 2007

PESD has been studying the emerging global market for natural gas through a series of closely integrated research projects. The topics of these studies range from focusing on the geopolitical implications of a shift to a global gas market, the factors that affect gas pricing and flows as LNG links the U.S. and European markets across the Atlantic basin, and how gas projects fare in privately-owned independent power projects (IPPs) in emerging markets.

One of the open questions in all these studies concerned China--the country uses relatively small amounts of gas now but could use much more in the future. The role of natural gas in the Chinese economy is of critical import both domestically and for global energy and environmental issues. The competition between coal and natural gas in this market has tremendous implications for local air pollution and for climate change. Rising demand for imported gas in China will also shape the LNG market in the Pacific Basin and could lead to the construction of major international pipeline projects to monetize gas supplies in Russia and the Middle East. The present paper is one in a series that looks at the Chinese market in detail.